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Lack of holistic mobile strategy, costs stall in-store Wi-Fi for retailers

April 1, 2013

Retailers such as Kohl’s, Target and Macy’s are embracing in-store Wi-Fi to drive sales and connect with shoppers on a deeper level. However, without a clear understanding of how the technology fits into a 360-degree mobile strategy, it seems many retailers may not be ready to deploy Wi-Fi at a larger scale.

Compared to cafes, airports, sports stadiums and restaurants, retailers have been relatively slow to roll out in-store Wi-Fi, which is most likely a move to stop consumers from showrooming. One of the reasons that retailers might be slow to catch on with Wi-Fi is because they are not viewing it holistically to marry in-store and digital marketing efforts.

“With many retailers jumping on board now, I think it’s important for them to step back and consider that being ready means thinking through the mobile shopping experience they’re providing for in-store shoppers and how it can be improved,” said Michael Della Penna, senior vice president of emerging channels at Responsys, New York.

“In-store prompts, including QR codes, bar codes and SMS opt-in and app download tied to special value and offers should be used in conjunction with Wi-Fi to create and extend the shopping experience and grow revenue and purchasing,” he said.

In-store opt-ins
With consumers increasingly using their mobile devices to comparison shop while in-store, there is little doubt that showrooming poses a serious threat to bricks-and-mortar retailers.

However, as stores roll out in-store Wi-Fi, security concerns and lack of consumer awareness are examples of challenges that retailers face with the technology.

Therefore, it is critical that retailers are upfront with consumers about which types of information they have access to via a Wi-Fi network.

“It’s important that retailers be transparent and offer consumers notice and choice during this process,” Mr. Della Penna said. “As long as they provide value, they will receive great acceptance.”

Additionally, savvy retailers need to make the most of their Wi-Fi networks to not only drive quick sales, but also build up CRM programs.

For exampl, take a mobile log-in page that shoppers have to access to receive Wi-Fi.

Retailers that offer in-store Wi-Fi should load their log-in pages with links that push the brand’s own mobile efforts. Brands will have a better chance of overcoming showrooming if they can direct a consumer to their own mobile site first.

Additionally, log-in pages can be used to tout a retailer’s SMS or email program to build a longer-lasting relationship with consumers once they leave the store.

Data gold mine
One of the biggest retail challenges with deploying Wi-Fi to bricks-and-mortar stores is the hefty price of installation. Often times, the technology requires significant investment from brands.

“The single biggest challenge still remaining for retailers comes down to labor and ongoing operations,” said Matt Witt, executive vice president and director of digital innovation at TRIS3CT, Chicago.

“With the exception of luxury items, there is such pressure on pricing that margins at most stores are incredibly small,” he said.

“Operationally, retailers have to rely on smaller staffs to manage each store. The cost for equipment and an Internet Service Provider would be minimal compared with making certain the labor skills and bandwidth exist within the staff to keep the network functioning.”

Additionally, in-store Wi-Fi is primarily owned by IT departments, leaves marketing and merchandising teams out of the picture. Without a clear way to determine ROI, retailers might be hesitant to invest in Wi-Fi.

At the same time, retailers also need to move quickly to roll out in-store Wi-Fi as mobile devices become more sophisticated and capable of holding large data packages, according to Alex Campbell, cofounder/chief innovation officer at Vibes, Chicago.

Eventually, retailers will lose their opportunity to bolster their own mobile initiatives with in-store Wi-Fi when consumers have better access to the Internet through their own devices.

When leveraged correctly, retailers have a gold mine of information on their customers via in-store Wi-Fi, which can be used as a large trigger for purchases.

The data gathered in-store can mirror the same information that retailers monitor on a Web site, per Mr. Campbell.

For example, retailers can pinpoint areas in the store where consumers get tied up in traffic or look at the number of consumers who leave a store without buying anything via their in-store Wi-Fi.

Additionally, retailers can see which products are racking up the most page views on their mobile sites.

“It’s really amazing how much anonymous data you can gather through Wi-Fi that’s not being looked at and measured,” Mr. Campbell said.

“I’d expect this to change quickly as more retailers become aware of what they’re missing,” he said.

“Think of all the interesting things Amazon learned about how people navigate their site because they could track behavior in real-time. In-store Wi-Fi is waiting to show retailers the exact same data for their physical stores.”

Showroom stalling
Some retailers might be hesitant to roll out in-store Wi-Fi because they believe that consumers will use it purely to comparison shop.

Recent data from JiWire’s fourth-quarter insight report found that although price checking and product reviews were the top two activities for in-store shoppers, consumers are also more open to connecting with a brand’s own site and programs than some retailers may realize.

For example, 36.7 percent of shoppers use in-store Wi-Fi to browse the retailer’s own Web site.

Furthermore, 47.3 percent of consumers in the study looked for deals, coupons and offers online that could be used in-store while shopping.

Eighty percent of mobile consumers were influenced by in-store Wi-Fi as a factor in deciding where they shop.

“Retailers should look at this as an opportunity and think about how they can make that experience better and a more integral part of the shopping experience,” said David Staas, president of JiWire, San Francisco.

“As consumers begin to expect Wi-Fi where they shop, the retailers who will benefit most are those who have planned for this and made it part of their brand’s retail experience,” he said.

Final Take
Lauren Johnson is associate reporter on Mobile Commerce Daily, New York

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